Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Laurence L. Harrod has been named Executive Vice President of Finance for Acadia Healthcare Company, Inc. (the “Company”) effective August 12, 2019. Mr. Harrod, 63, most recently served as Senior Vice President of Finance, Behavioral Health, at Universal Health Services, Inc. (NYSE: UHS), having joined UHS in September 1996.
There are no family relationships among any of the Company’s directors, executive officers, and Mr. Harrod, and there are no related party transactions between the Company and Mr. Harrod reportable under Item 404(a) of Regulation
S-K.
In connection with the appointment of Mr. Harrod as the Company’s Executive Vice President of Finance, the Company entered into an employment agreement (the “Agreement”) with Mr. Harrod, effective August 12, 2019, that includes the following terms:
Annual Cash Compensation
. Mr. Harrod’s annual base salary will be $555,000 and his salary may be increased from time to time at the Company’s discretion. Mr. Harrod’s target annual bonus for each calendar year during his employment period with the Company will be 85% of his base salary, with a maximum cash bonus equal to two (2) times the target bonus.
Annual Equity Awards
. For 2019, Mr. Harrod will be entitled to a long-term incentive award with a target value equal to not less than 220% of his base salary, which award shall be in a form and on terms consistent with the long-term incentive awards of other senior executives of the Company granted in 2019. Thereafter, Mr. Harrod will be eligible to receive annual grants of equity or other long-term incentive awards in amounts as determined by the Compensation Committee of the Board of Directors.
Make Whole Payment.
To offset the value of compensation forfeited or forgone and compensate for other economic consequences of his departure with his former employer and joining the Company, Mr. Harrod will receive a
one-time
cash
sign-on
bonus in the amount of $200,000, and retention cash bonuses of $410,000 on each of the first two anniversaries of the Effective Date (subject to Mr. Harrod’s employment at such time).
Benefits
. Mr. Harrod will be eligible to participate in arrangements for health, insurance and retirement benefits available to other senior executives of the Company.
Termination Payments
. In the event that the Company terminates his employment without “cause” or if he resigns his employment for “good reason” (each as defined in the Agreement), Mr. Harrod will be entitled to receive the following severance benefits, subject to Mr. Harrod’s timely execution and
non-revocation
of a general release of claims in favor of the Company: (i) accrued, but unpaid base salary, paid time off and sick pay, (ii) accrued, but unpaid cash bonus with respect to a completed performance period, (iii) an amount equal to the sum of his base salary and target bonus, each as in effect at the time of his termination, (iv)
pro-rated
annual bonus for the year of termination based on actual performance, and (v) Company payment of premiums for continued health and dental insurance premiums for 18 months following Mr. Harrod’s termination.
Restrictive Covenants
. Mr. Harrod will be subject to
non-competition,
non-solicitation
and
non-disparagement
covenants during the term of his employment and for specified periods thereafter.